People law in brief - May 2011 

Focuspoint

The Bribery Act 2010 introduces a number of offences for which both an individual and company can be liable and face civil (unlimited fines) or criminal liability (maximum jail sentence of 10 years). Those involved in making, accepting or benefitting from the bribe are at risk of liability.

Also, not only will any investigation by the authorities be time-consuming to manage, it could also have significant commercial implications. For example, organisations which rely on public sector contracts could be excluded from future public sector contracts whether they are found to have offered or accepted a “bribe” or just failed to take steps to prevent bribes taking place. I think the Act could also affect the way that companies provide corporate hospitality. This of course could be detrimental to business where hospitality is essential to forge better relations with potential or existing clients and to maintain competitive advantage.

Our advice is to understand what the Act sets out to do, what it prohibits in practice and how much your organisation is affected by the Act. You should then put in place adequate procedures to prevent bribery because this is the only defence to liability.

What is a bribe?

A bribe is an inducement or reward offered, promised or provided in order to gain any commercial contractual, regulatory or personal advantage. For example:

Offering tickets to a sporting event if a company agrees to do business with you;

A supplier giving your nephew a job in return for you using your influence to send business their way;

Gifts and hospitality or donations if they are given or received with the intention of influencing business decisions; or

Making a payment to speed up an administrative process, such as clearing goods through customs.

What steps should businesses take in anticipation of 1 July 2011?

Carry out a proper assessment of the particular bribery risks you face, taking into account relevant factors such as the type of clients or customers and the place in which business is carried out;

You will be expected to have in place an Anti-Corruption and bribery policy. This should include a statement of the company’s commitment to bribery prevention, set out the general approach to reducing risks and give an overview of implementation strategy;

Review other relevant policies including gifts and hospitality policies;

Raise the issues with the Board and agree an action plan. Senior management in a company should take the lead in ensuring the company does not engage in bribery and has appropriate policies in place. A Code of Conduct and/or a Statement of Ethics are useful statements which should come from the Board to demonstrate commitment from the top;

Consult or inform employees, communicate new policies and then train them on the new policies and any changes to current policy and practice on hospitality, gifts and expenses. It is essential that you can demonstrate that you have done this so that they know about the relevant policies and procedures rather than procedures merely being a paper trail which does not do what it is intended in practice;

Consider the implications with those you engage in business. Amend your supply contracts and require relevant warranties in business sales;

Monitor and review the procedures you put in place. Compliance is not a one-off exercise. It is an ongoing task that requires regular monitoring and review. Define and designate responsibilities to appropriately senior and experienced team members;

Ensure you have adequate record keeping and internal controls; and

Seek legal advice if you are unsure or need support in putting the above measures into place. We can provide, for example, support and draft memos to the Board, Statement of Ethics, Code of Conduct, policies, advice of amendment to supply contracts or warranties and, of course, training.

Briefcase news

Employee is dismissed following comments on Facebook
In Preece v J D Wetherspoons plc ET 2104806/10, an Employment Tribunal held that a manager of a pub was fairly dismissed for gross misconduct after making inappropriate comments on Facebook about her customers. The comments followed verbal abuse and physical threats from two customers and, whilst they were posted during working hours, I think the decision could still have been the same even if placed in her own personal time.

The Tribunal held that, although Miss Preece was unaware of her inadequate privacy settings, she was responsible for the comments and, as they were placed in the public domain, the comments damaged her employer’s reputation. In my view, the employer’s position is particularly strengthened if it has a social media policy in place – this would guide employees on their use of such sites, the extent to which sites can be accessed at work, the circumstances in which the company can monitor the use of sites and when information or postings on the sites could be used by the company in, for example, disciplinary situations. 

College is liable for misleading and negligent comments about ex-employee
It is a well-established principle that an employer can be liable for a negligent or misleading reference provided in relation to an ex-employee. This is because the reference is provided shortly after the employment has ended and the employer still holds a duty of care towards the employee (Spring v Guardian Assurance [1995] 2 AC 296). This is taken a bit further in a recent High Court decision in McKie v Swindon College [2011] EWHC 469 (QB) where an employer was held liable to a former employee for damages for negligent misstatement. This arose when an email was sent to the employee’s new employer containing damaging remarks, which were found to be “fallacious and untrue” and “sloppy and slapdash”. The Court was satisfied that, although this was not a reference situation, a duty of care still applied.

So, as always, exercise caution if you are considering putting any potentially damaging statements in a reference or communication with a new employer (verbally or written) but do not be misleading and paint a rosy picture where this is not accurate. If in doubt, it is increasingly common to only give factual references, stating dates of employment and job title and a brief factual description of the role.

Watch this space

On 16 May 2011, the Government launched a consultation on plans to introduce a new system of flexible parental leave from 2015. This forms part of its plans to create a modern workplace for a modern economy. Many of the current regulations have been seen as being too rigid, reflect outdated ideas of parenting and family responsibilities and restrict employers. The thinking behind this new system is to help parents and business by giving them much greater choice and flexibility.
In brief the consultation proposes the following:

Flexible parental leave - After the first 18 weeks' maternity leave for mothers, the remaining maternity leave entitlement will be reclassified as 'parental leave', therefore allowing it to be taken by either the mother, father or both at the same time. Employers would be able to ask staff to return for short periods to meet peaks in demand, or to require that leave is taken in one continuous block, depending on business needs.

Flexible working - Extending the right to request flexible working to all employees, not just those with children under 17 (or 18 for parents of disabled children).

Working time regulations (WTR) - Amending the WTR to give employees the right to carry over untaken holiday into following years where they have lost the chance to take paid holiday because of sickness absence or maternity/parental or paternity leave. Under the proposals, the right to carry over would be limited to the minimum four weeks' compulsory paid leave which is required by the EU (i.e. the employee would not have the right to carry over the extra 1.6 weeks statutory entitlement which the WTR gives or additional contractual entitlement). This is already practised by some organisations but could still have significant implications for some businesses.  The government is also considering proposals to allow employers to 'buy out' the extra 1.6 weeks’ statutory holiday.

Equal Pay – Introduction of a duty on the Employment Tribunals to order an employer, who has lost an equal pay or equivalent sex discrimination claim due to differentials in pay amongst men and women, to conduct a pay audit and publish their results. If this does go ahead, we strongly recommend starting to do your own audits now so that you can address key risks area before you are compelled to publish them and/or risk multiple claims from employees.

The consultation is open until 8 August 2011 and, could result in significant changes for both employers and employees. For further information please visit www.bis.gov.uk/modernworkplaces

And Finally...

Government announces Employment Law Reforms - Not.
On 16 May 2011, a number of national papers leaked proposals which would, if true, substantially change some well-established employment law, for example capping discrimination awards, reforming TUPE and reducing redundancy consultation periods.

However, before you start to get excited or cry “Not more changes!”, it has all turned out to be much ado about nothing.  The Government has in fact only stated that it will be "looking carefully at the arguments for reform" but that "legislation will not necessarily be the route to implement any change if there is a case for reform". In other words, the Government knows that it cannot simply do away with the framework of TUPE or cap discrimination awards (both of which derive from EU Directives) without the ECJ having something to say about it!